Auto parts maker Magna misses profit estimates as costs bite
2022.07.29 14:13
FILE PHOTO: Magna logo is during Munich Auto Show, IAA Mobility 2021 in Munich, Germany, September 8, 2021. REUTERS/Wolfgang Rattay
(Reuters) -Canadian auto parts maker Magna International (NYSE:MGA) Inc reported a lower-than-expected quarterly profit on Friday, hit by higher commodity and energy costs worsened by Russia’s invasion of Ukraine.
The conflict in eastern European has exacerbated input costs including those for freight, energy, commodity and labor for auto firms, which were already reeling from supply snarls due to China’s COVID lockdowns.
Magna, which operates six plants in Russia that employed 2,500 people, said its facilities remain substantially idled and production is not expected to resume before 2024.
The Aurora, Canada-based manufacturer flagged reduced earnings on lower sales at facilities in Russia and recorded non-cash impairment charges of $376 million for the second quarter ended June 30, related to its investment in Russia.
The company, which makes parts such as body structures, chassis and powertrain for customers including Ford Motor (NYSE:F) and Volkswagen (ETR:VOWG_p), expects the ongoing cost pressures to continue through the year.
Magna’s quarterly net sales rose 3.6% to $9.36 billion, helped by an increase in prices and higher global light vehicle production.
Excluding items, it reported a profit of 83 cents per share, compared to analysts’ estimates of 94 cents per share, according to Refinitiv data.
